CDP Retires Minting Ability Indefinitely

Temp Check Discussion
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I propose an option for CDP owners to help protect the peg. The CDP owner would voluntarily retire any new minting capability for the CDP position.

They would still be able to burn the debt down and claim their collateral again when closed.
Their CDP could still get redeemed or liquidated.
They can still deposit, they can still withdraw

In return the CDP owner would be locked in at the current RMR indefinitely or perhaps for a 6mo or even 1 year grace period. Another option would be to lock them in at 230-250% RMR indefinitely or for a 6mo/ year grace period. after the grace period, they would be subject to current/newest RMR.

Interest would still be subject to change on the current debt position.

This would help to honor the contract that the cdp owner signed, even given the V2 changes. and provide some integrity and stability for users who have been here and have been subject to lots of changes from the DAO after contracts have been signed.

But more importantly, this provides a major slow down in the minting and dumping of IUSD. It helps secure the peg tremendously as we can stabilize and predict the remaining CDP and their potential minting ability or lack thereof. This will stop the bleeding of future mints and dumps.

It would also lock in a ton of collateral for the protocol and for CDPs for the longterm. CDPs will have a greater chance of longevity and it would provide a base for TVL.

This helps the dao have a better sight on cdps and their potential actions, and in this case, reduces a very hostile action that is causing the depeg, which is minting and dumping of iusd for alternative gains in other tokens and currency, this move would really protects IUSD

a cool feature would be that new mints could still be allowed but only if the mint goes directly into a stability pool and then returned to burn the cdp down again. there would be no option to move the minted iusd anywhere else. this would only be a feature for the CDPs that voluntarily sacrificed minting capability indefinitely so they can still support the peg and have incentive to mint and hold iusd. This provides an option to still mint and get involved in stability pool and support the peg, but prevents mints and dumps.

The problem with increasing the RMR has been that once people hit the new ratio, ADA goes up and the minting and dumping begins again but with fewer users and a remaining CDP user population holding their breath about the DAO’s next experiment.

This feature of freezing new mints indefinitely for some piece of mind benefits both the User and the Dao goals of stabilizing the peg. And of course is an extremely generous move on the DAO to pass something like this.

There still would still be the new 30% interest and 185, or 230 or 250% RMR those who decide to do this, and these rates would last the duration of the life of the CDP. Which is actually a decent deal for the DAO as one day the RMR and interest might be lower again and these CDPs would still be grandfathered at these rates that they get locked in when they retire the minting ability.

Any new mints would be under the updated RMR and interest of course, they may need to open another CDP if they want to participate in minting and using the iusd for whatever they please.

And if people get their collateral higher than 300% they could be incentivized to close the old cdp and start new mints in a new cdp under new rmr rates.

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I would definitely opt in. I think it is a reasonable trade off to have a fixed parameters for a specific time period exchanging for not being able to mint&sell. This would bring predictability and stability to the CDP owners and at the same time it would limit the mint&sell actions.

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Absoultely if you are not minting and dumping then you are showing a submisive act for the peg and the dao. You are yielding malicious activity that causes depeg.

Let the people that want to dump iusd pay for it. Reward and honor contracts by allowing them to opt out of future mints and give them time to get their cdp up to 300%

Its a huge win for the iusd peg, for the dao and for users.

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I think this is a clever idea and would support it if it was technically feasible to implement.
The only concern I have freezing or “retiring” a cdp should be permanent and not allow any more iUSD to be minted even if it goes directly into the Stability Pool.

Once a user has chosen to “retire” their cdp and lock in the current parameters of an iasset, the only actions that should be allowed are:

  • adding and withdrawing collateral
  • paying off debt partial or in full to close.

And to clarify, since the proposal only mentions iUSD, would be be for all iassets as well? The ability to lock in current market rates?

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I suppose i would leave that up to the rest of the community. I really only see a big focus on iusd because of the depeg and changes we are making to to fix it. I wouldnt see any reason why ibtc or ieth would be under the microscope to mess with.

It would be costly to dev this up anyway.
And ibtc and ieth are already peged with stable rates and stable rmr for the time being.

Its working so thats best.

And what cdp owner would volunteer to sacrifise minting rights when all is stable and interest rates and rmr are not on the voting ballot.

just my opinion of course. I like your read on this. Just tried to put out some options to get this going and see if we can find some common ground as it would benefit both user, peg, dao goals.

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Yea friend, I like it. Totally has my support.
I think we just need to clean up the language alittle bit so that it doesn’t leave anything open to interpretation(guessing).

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Another option here would be for the cdp owner not to voluntarily retire the minting indefinitely but only for a certain period of time.

Perhaps until the peg reached a certain price to iusd or ada. Ie no minting until peg reaches .95 or 1.

Or they could voluntarily stop minting until their cdp gets to a certain collateral ratio or until they burn down a certain % of their debt.

These are positive incentives to publicly hold off on minting and selling for a certain period of time instead of forever, at certain times and prices.

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I’m a bit confused as to why a CDP owner would want to lock in a 230-250% RMR. I suppose that they could fear that the DAO would vote to greatly increase it to 400% or something of that sort, but I don’t see that as likely. As such, it sounds like it could be quite a bit of work for fairly little benefit if very few people opt to use the feature.

What I do see there being a market for is “fixed interest rate” CDPs. In typical markets there is often an option to take a variable rate loan that has a lower rate, but can change, or take a fixed rate loan that is a bit higher. If this could be implemented such that fixed rate CDPs could be established with a time limit on how long they could mint iAssets (say 1 epoch) then I think many would opt for the long-term stability knowing that a DAO vote would not be able to change their interest rate.

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Users want stability in their contracts. Plenty of users would sign up for peace of mind and to take advantage of a set rmr or interest. The dao keeps changing contracts and users are clearly leaving becuase who knows what the dao will come up with tomorrow, let alone 6 months from now.

The dao is tightening the rope on users whenever they see fit, even if the user is not the one minting and selling. A voluntary lock up on minting will provide cdp owners an out for a run away dao and runaway depeg.

It shows the dao that the cdp owner is not the one minting and selling and causing the depeg and so the cdp owner is exempt from dao changes in some way.

Should the people who are not going to be participating in causing future depeg pay for the people who are minting and selling iusd and causing the depeg? Seems fair they should get a better rate and rmr if they are not planning on causing the depeg.

And to say we wont see rmr to 400% is speculation. It could easily happen, some are pushing for an unlimited rmr. But even if
400% doesnt happen its up to the cdp owner to opt in for this if they see fit. Its a compromise for the peg and negotiation for rates in return for retiring the very problem that is causing depeg which is minting and selling.
so more options is always better for investors especially the ones who are paying for the depeg that is caused by those who are going to continue to mint and sell.

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There is a lot going on in this proposal. As I read your proposal - you are wanting to achieve a few outcomes. But the main outcome is to provide a mechanism that provides a basis for the DAO or changes to the DAO to be able to make a distinction between different users of CDPs. That’s fair enough too. The bulk of the discussion that’s going down is around the problem of the depeg of iUSD. But a lot of time the solution that is on offer is not aimed at the behaviours that are principally responsible for the depeg. Instead, what is used is the blunt fiscal tool of changing CDP parameters which of course impact not just the bad “mint and dump” behaviours but also the good behaviours of “mint and hold”.

In a way its a rather sad proposal because what it comes down to is that the “opt in” is a mechanism for protecting the “good” CDP people from the unpredictability of the DAO, or to put it more bluntly, its a mechanism for protecting the good CDP people from the voting power of the major holders of Indigo. Its a rigged game at the moment. Be interesting to see how things would play out if voting was based on net value of CDP’s :)These folk have have more skin in the CDP game. But that’s beside the point. I’m with you on the idea that the good users of CDPs need to be treated differently. And yes, if the good users are minting for longer time positions, and providing liquidity to the SPs then they should not be subject to ongoing changes to the CDP parameters that are principally aimed at solving the depeg problem and aimed at targeting the mint and burn behaviours that give rise to the depeg. Interest changes and RMR changes should have the bad actors in their sights while at the same time encouraging good behaviours that promote the longevity of the protocol. Assuming that that is the aim, and that the DAO is not a mechanism for the transfer of wealth to the major Indy holders. Sadly I don’t think a change like this can happen at the level of code without considerable work, instead its going to take a fundamental shift of thinking from those who control voting power and yet don’t expose themselves to the world of CDPs. It’s going to be interesting to see how this unfolds. Already there is a suggested proposal to use the blunt fiscal instrument of raising CDP interest rates to 30% and RMR to 400% - can’t see too many big INDY holders not liking this and I can’t see too many big long term net value CDP holders liking it.

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thanks for these thoughts, i know the current opportunities and blunt force that rmr and interest bring. these are available levers to pull. but the idea is provide new solutions because its clear the current rmr and interest rate increases are problematic.

yes new smart contracts would need to be created for something like this and it would take time and resources

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I think Adabeacon in the Temp Check iUSD paramter change proposal has suggested a strong alternative to turning up the heat on CDP holders.

Allocate treasury funds to counter trade the depegging forces. As is suggested: “Even just announcing $$$ is going to be used to just buy when it’s below $0.95 and sell at $1.05 or something would incentivize people to buy right now at $0.87 and hold til it reaches at least $0.95 for an easy gain. Then the people outside see the momentum shift and view it as a $1 stablecoin discounted 5% and do the rest of the work. This also give a minimum 10% gain in treasury holdings, providing even more pegging force.”

I’d like to see this idea developed and temp checked… I definitely would support that.

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would be interested to see how much purchasing power the treasury could come up with to combat the iusd shorts. i would hope shorts dont see it as an opportunity to mint and sell even more because they know there will be enough volume to keep iusd afloat

i do think its worth it use treasury/interest to purchase iusd and provide liquidity and would like to see them maximize their purchasing power with strategic buys or perhaps in a derivative play where a small amount of capital can represent and influence a larger volume through options contracts.

i also considered using the interest/treasury funds to directly incentivize (pay off) cdp owners to burn their cdp at par by a certain time or price